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INSYS Therapeutics, Inc. (INSY)
Q2 2013 Earnings Call
August 13, 2013 11:00 AM ET
Michael Babich - CEO
Darryl Baker - CFO
Jason Butler - JMP Securities
Rohit Vanjani - Oppenheimer
Michael Faerm - Wells Fargo
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On today’s call are Michael Babich, Chief Executive Officer and Darryl Baker, Chief Financial Officer.
The format of today’s call is as follows: Mr. Babich will begin with an overview of recent corporate highlights; Mr. Baker will then provide a summary of financial results for the quarter followed by a Q&A session. Before we get started, I would like to remind everyone that statements made on the conference call today that express a belief, expectation, projection, forecast, and anticipation or intent may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward looking statements are based on information available to INSYS management as of today and we assume no obligation to update these statements as circumstance change. These forward-looking statements may involve a number of risk and uncertainties which may cause the company’s results to differ materially from such statements. Risks and uncertainties could affect forward-looking statements including the failure to successfully launch new products and increase competition. Such risks are outlined in our routine filings with the SEC including our registration statement on Form S1 and our Form 10-Q filings.
Thank you and with that I’ll turn the call over to INSYS’ CEO Michael Babich.
Thank you and good morning everyone and thank for taking the time out of your day to join us for our first conference call as a public company. As many of you know, we completed our IPO in early May. The company was able to raise $32.5 million in net proceeds providing us with the financial strength necessary to build upon our strong supportive care franchise.
Since the IPO, we have continued to demonstrate significant progress in all aspects of the company. We achieved our first quarterly profit in the quarter ended in March and during the second quarter, we demonstrated significant growth in both earnings and revenues, interest generated nearly $19 million in net revenue during the second quarter of 2013, an increase of approximately 70% sequentially. As a result of the sales growth, we recorded EPS of $0.26 per diluted share.
Subsys sales continue to make up the vast majority of the quarterly revenue increase, growing to $18.5 million during the second quarter from $9.7 million in the first quarter, a sequential increase from Q1 to Q2 of over 90%.
For those of you that may be somewhat new to the INSYS story, Subsys is approved for the management of breakthrough pain and cancer patients who are opioid-tolerant. The FDA approved the product on January 4, 2012 and we launched the product in the last week of March in 2012. And we market Subsys through our own U.S. based sales force approximately 60 sales professionals focused in the supportive care space. We utilized an incentive based sales model that employs a pay structure where significant component of compensation as in bonuses based on performance.
I am proud of our significant penetration for Subsys and our success has allowed us to invest heavily in research and development and sales and marketing going forward. We're very excited to accelerate our pipeline, as we believe the Subsys spray device is a tremendous platform for additional molecules. Our team has proven that there is a need for unique platform that can deliver molecules in a simple manner or convenience and onset of action is important.
I look forward to announcing our candidates in the future once they reach the IND stage. In regards to our Dronabinol franchise as a reminder we have successfully completed our pivotal bioequivalence study and our pre-NDA meetings with the FDA for our oral solution which will be branded product to compete against the generic Marinol. As a reminder we currently market our generic Dronabinol soft gelatin capsules through our distribution partner Mylan Pharmaceuticals.
Dronabinol soft gel capsule is a generic equivalent to Marinol approved as a second line treatment for chemo-induced nausea and vomiting and anorexia associates with weight loss in patients with AIDS. Based on our data and clinical trials, we believe that our oral solution product bas substantial potential advantages compared to Marinol. Some of those include a more rapidly detectable blood levels and a more reliable absorption profile. We plan to sell this branded product through our own internal sales force as there is significant synergies between the prescribers of Subsys and Marinol
Ultimately, we believe that these advantages will allow us to both penetrate and expand the current market with potential additional indications that we will work on in our R&D group. I am extremely proud to work side by side with my co-workers at INSYS as we have created an opportunity to continue to drive revenue growth while continually reinvesting in our business.
We believe that reinvesting our profits into R&D and sales and marketing will provide us a continued pathway to increasing shareholder value. At this point I would like to turn the call over to Darryl to discuss our financials in more detail. Go ahead Darryl.